When it comes to investing in a new venture or service, a big part of the decision is the potential return it promises. For businesses in particular, return on investment (ROI) is crucial and anything that’s going to make more money than it costs to run is typically regarded as having a decent ROI.
However what businesses need to remember is that ROI doesn’t just apply to the financial side of things. In an age where increasingly, education-based marketing methods are (arguably) becoming more popular than the traditional hard sell, this point is even more pertinent.
There’s more to it than just money
It can be tricky laying out the potential ROI on methods like content or social media marketing. Although we content marketers are confident that businesses WILL benefit from an improved reputation, being positioned as a thought leader and better quality traffic, it is difficult to relay this in financial terms.
During my morning trawl of the latest content marketing tweets this morning, I stumbled upon an interesting article about the recent Super Bowl and how well brands which advertised during its half-time fared. Citing research from the Centre for Measurable Marketing (CMM) at New York University’s Stern School of Business, the article threw up a term I haven’t yet come across – Conversational ROI.
Measuring the impact of social media conversation
Coined by NYU Stern, the term was defined as “both the direct impact of word-of-mouth communication on marketing performance, including dollar sales, as well as the amplification effects which social provides to both offline and online paid channels of communication.”
It’s about the social conversations we, the public, are having about a brand and how this relates to the business’ initial investment in advertising/marketing. It struck me as really interesting that social media marketing has become so significant that it warrants a specific ROI terminology all to itself.
In fact the director of research at the CMM, E. Craig Stacey PhD, believes that if businesses measure the conversations happening around their brands, they can adjust their communications to reflect this – which could “dramatically impact their ROI”, he claims. So what sort of things can businesses analyse to effectively utilise this metric?
Who, what, where, how…
It’s all about the basics. Who is talking about the brand, where are they based, when are they saying it and how often? Perhaps most importantly, what are they saying about the brand? This is where you can really dig deep down into the conversation; working out the ratio of positive to negative tweets or Facebook updates. Even taking the neutral content into account can help.
It’s also worth considering how influential the people who most regularly talk about your brand are on the respective social media networks. For example, if they are particularly prolific on Twitter and therefore have the power to influence other users, a business should keep them on their radar; perhaps also taking them into consideration when using targeted communications.
Thinking about what people are saying in relation to their location could prove useful too, as you can target specific demographics via segmented campaigns.
Lastly, understanding the time of day and week a business’ most valuable Facebook/Twitter users are likely to post content about it can be crucial…
If a business increases the reach of its content (and therefore its promotions, services, overall brand), it opens itself up to a whole new world of potential consumers. In fact, the chances are some of these consumers are already talking about that business.
The conversation is already happening, it’s just up to businesses to get involved and then take the chance to educate and engage with consumers – potentially leading to a sale. What better ROI is there than that?
Thanks for picking up on our research and for your insightful blog posting.
Our Super Bowl study is part of a series of research studies focused on measuring the impact of paid, owned, and earned media on the consumer’s path to purchase and a brand’s ultimate marketing performance (e.g., store traffic, sales). What we see repeatedly is that online channels – whether paid, owned, or earned – work differently from traditional, online channels in contributing to return on marketing investment. We live in a three- or even four-screened world, where consumers are watching television with a notebook in their laps with a smartphone in their pockets and a tablet computer nearby.
We see an ad during the Super Bowl on TV and then Tweet about it, search for information online about the product, or go directly to the company’s website. Along the way, we are exposed to search and display ads online and comments from our friends on Facebook and Twitter. These online channels of communication are therefore amplifying the effects of the TV (or print or radio or out-of-home) advertisement, which triggered the online journey. We’ve known for decades that consumers respond more favorably to word-of-mouth communication than to the marketer’s paid media. With the advent of social media platforms and the corresponding monitors to measure online buzz, we finally have the opportunity to measure the Conversational ROI™. Just think of the opportunities this creates for real-time marketing!
Look forward to future research from us on the topic at http://www.stern.nyu.edu/measurablemarketing.
#ConversationalROI
Hi – thanks for picking up on our take on your research!
I definitely agree that metrics relating to online marketing are significantly different to those utilised within traditional marketing – how could they not be? The way in which the public consumes online marketing isn’t the same and neither is the messaging brands utilise across these wide-ranging channels.
As you rightly say, the way in which consumers are interacting with online marketing is entirely different too; discussing their experiences with a brand on Twitter or Facebook, rather than face-to-face at work or in a social setting. The latter is seemingly becoming less effective in this digital age (especially the obviously-paid-for stuff!) and I believe as digital/online marketing becomes even more prolific, marketing metrics will follow.
I’ll look forward to reading more of your research on conversational ROI; especially as the rise of social media becomes even greater. Would also be interested to hear your take on how companies perhaps with a smaller resource could undertake conversational ROI measurements without the use of intelligent software? Doing it manually would take hundreds of man hours, but smaller companies sometimes just don’t have the budget to procure measurement software… could this potentially put them off utilising the metric at all?
Thanks again for your comments!
Deborah